• Consumers Energy has been trying to sell 13 dams to a private equity firm
• A member of the Michigan Natural Resources Commission said in a meeting Wednesday he wants to draft a resolution in opposition to the proposed sale
• The Michigan Department of Natural Resources director said he’s worried the department will end up inheriting the dams

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Michigan fish and game regulators appear poised to wade into the controversy over Consumers Energy’s proposal to sell its 13 aging hydropower dams to an out-of-state private equity company.

On Wednesday, following a presentation from critics of the sale plan, members of the Michigan Natural Resources Commission discussed introducing a resolution to formally oppose it, with one member saying he fears selling the dams could leave Michiganders on the hook if they fall into disrepair.

“We don’t have a vote, but we have a voice,” said Commissioner Brandon Fewins, who told Bridge Michigan he intends to introduce the resolution at the next commission meeting on April 8. 

To take effect, the resolution would need support from a majority of the commission’s seven members. None of them clearly indicated Wednesday how they would vote if the matter moves forward.

The commission’s interest in the dams comes as regulators at the Michigan Public Service Commission and Federal Energy Regulatory Commission ponder whether to authorize the proposed sale. 

RELATED: 

• Consumers warns Michigan: Dams could be torn down unless utility sells them
• Michigan agencies, outside groups question Consumers dam sale plan
• Consumers: Selling Michigan dams, paying double for power cheapest route

State utility regulators, Michigan Attorney General Dana Nessel and several ratepayer and environmental advocacy groups have urged the Public Service Commission to reject the deal or impose conditions. They argue the current sale terms expose the public to financial and public safety risks by failing to ensure new owners will invest in needed maintenance on the structures.

Consumers disputes those arguments. An executive at the utility recently said if the deal isn’t approved as-is, Consumers will look to decommission all 13 dams — a move that would likely anger those who live along or recreate in the structures’ vast reservoirs.

For years, the utility has been looking for a way out of the hydropower business as it faces hundreds of millions in upcoming costs to maintain dams that generate little power or revenue. Last fall, officials announced plans to essentially give the dams away to Confluence Hydro LLC, a newly created subsidiary of Maryland private equity firm Hull Street Energy.

Consumers would then buy back the dams’ power at double the market price. The company estimates that arrangement would cost it and its customers $1.25 billion in today’s dollars — a hefty sum, but hundreds of millions cheaper than keeping or decommissioning the structures by the company’s estimate.

But critics including Michigan Department of Natural Resources staff have accused the company of dramatically overestimating the cost of alternatives, while striking a deal that contains too few protections for ratepayers and the public.

The department, which typically favors dam removal, has taken the unusual step of getting involved in deliberations over the proposed sale, with its director, Scott Bowen, warning Wednesday he fears the arrangement would ultimately lead to taxpayers inheriting the expensive structures.

In a statement Wednesday, Consumers spokesperson Brian Wheeler maintained that selling the dams is “the best and most affordable” option for the utility’s customers. 

“We firmly stand by our sale agreement for the dams, and we’re focusing our work on achieving that goal,” Wheeler said. “The views that were expressed at today’s NRC meeting are out of step with what we have heard from communities and most stakeholders regarding the future of these sites.”

The presentation at the Natural Resources Commission meeting came from representatives of three groups that have filed testimony before the Public Service Commission opposing the sale.

Among their chief concerns is Confluence Hydro’s plan to divvy up dam ownership among 13 separate limited liability companies.  

Tom Baird, a former Natural Resources Commission chair who now represents river conservation groups Anglers of the Au Sable and the Michigan Hydro Relicensing Coalition, argued that arrangement is designed to shield the parent company from liability if its subsidiaries fail to maintain the structures, leaving the public to fund repairs or risk another failure like the 2020 Midland dam breaks that flooded vast areas of mid-Michigan and inflicted hundreds of millions of dollars worth of damage.

That concern seemed to resonate with Commissioner John Walters.

“It’s very evident to me that, if this sale goes through and they create 13 different LLCs, and they walk away from all those, the state of Michigan and the citizens of Michigan are on the hook for this,” Walters said. “I find that to be completely appalling.”

Other critics of the proposed sale told fish and game regulators on Wednesday they fear new owners would fail to address longstanding water quality issues caused by the dams. The structures warm and fragment rivers to the detriment of coldwater fish, a reality that has fueled longstanding head-butting between conservation groups, environmental regulators and Consumers.

“If Consumers won’t clean up their mess, then why would I think that a Maryland private equity firm would give a damn?” asked George Heartwell, a consultant for the Michigan Hydro Relicensing Coalition.

In a statement to Bridge Michigan, Confluence Hydro spokesperson Natalie Joubert countered that the company has a track record of maintaining hydroelectric dams “on schedule, on budget and in compliance with all regulations.” 

Mark Eyster, the newest Natural Resources Commission member and a former administrative law judge within the Public Service Commission, seemed skeptical that opponents of the sale could influence the commission.

“Good luck,” he told them during Wednesday’s meeting, adding that it will be “an uphill fight.”

In testimony filed in the Public Service Commission case, DNR staff have argued that Consumers overestimated the cost of decommissioning the dams.

“This is a rare thing for us,” Bowen said of the agency’s involvement in the sale deliberations. “I don’t think, historically, the DNR has ever intervened in one of these cases and we didn’t come by it lightly.”

Although the agency hasn’t taken a formal stance on the sale, it has long supported dam removal wherever possible as a means of addressing the structures’ negative impacts on rivers and their high maintenance costs.

Bowen noted Wednesday that the DNR owns more than 200 small dams, many of which it inherited from previous owners.

Noting that the agency has struggled to cover the cost of needed repairs on those structures, he said he sees the potential sale to Confluence Hydro as “a long-term way of us getting 13 more of them with bigger, bigger problems.”

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